Entrepreneurs never struggle with a short to-do list—the responsibilities of a business owner are immense. Most do their best to avoid focusing heavily on small details but may end up ignoring important aspects of business, especially when it comes to the organization’s finances.
Typically, owners focus on propelling their company’s growth by finding new customers and assembling the team and technology they need to manage and service that growth. This makes sense, as the top concern for small businesses in the US (many having scraped by throughout the pandemic) continues to be generating enough revenue.
Beyond these immediate pressures, business owners often don’t take time to think about changing their business practices unless the outcomes would directly affect customers or increase ROI. However, prioritizing long-term projects can significantly improve business health and set up the business for a more financially sound future.
In my experience, these are the three financial tasks that often get buried under the more demanding to-dos but could drastically improve the business in the long run:
1. Review all service providers
It’s easy to fall into the trap of choosing service providers and maintaining the status quo, even when the services aren’t tailored to your business’s needs. Reconsidering providers—such as healthcare brokers, bankers, payroll systems, CPAs and 401(k) advisors—can save you money, get you better service, and provide specializations that suit where your business is today.
A good rule of thumb is to review one service provider every year. Get recommendations from people you trust and think beyond the largest, most famous provider. The largest provider in any space is often not the best fit for new or small businesses. Larger providers are often built to service large companies that have specific teams with experience in each area.
Often, the best providers for small businesses are those that work with businesses like yours. They may be used to working with a business that doesn’t have separate payroll, HR, finance or benefits teams. They will treat you like an A-list client and give your business the time and attention it deserves.
2. Refresh the business growth plan
Growth is survival for a business, but many business owners see it as a bonus activity. Your business growth plan is about looking at the future of your business, even beyond your involvement. Robust growth allows you to sell the business for more money one day; it represents a key component of exit planning for business owners.
Growth planning naturally starts with adding elements and tools to your business. But focusing on aspects of your business you can eliminate or delegate is also valuable. Ask yourself: What are you doing for clients that takes your time and energy but doesn’t seem to create value for them? Could you eliminate these tasks? Are there any tasks you could delegate or outsource—for example, can your CPA help you run payroll? Can you hire a group to take over your digital marketing?
Eighty percent of small businesses are expecting to outsource at least some business tasks this year. Outsourcing these smaller tasks can allow you to focus on your own business and save room at the top of your to-do list for bigger goals.
3. Make time for personal wealth planning
Many business owners have an idea in their heads of retiring at a certain age, but they don’t often spend time reviewing their personal wealth planning or the details of their exit plans. The big question is: How much does your business need to sell for, or how much does it need to grow, so that you can retire and continue to live your life the way you want?
While worrying about your employees, revenue, tech challenges, and the pandemic, you’d be forgiven for forgetting about your own needs. Four-fifths of business owners reportedly have no written transition plans. This can leave the business in a state of confusion when transition time eventually comes.
Business exit planning doesn’t mean looking for the exit now. It means setting a plan for how you’ll value your business and how you’ll configure your team when it’s time to sell or retire. It sets your customers, community, and employees up for a successful transition. Don’t put off planning just to find out that your buyer wants you to be a consultant for three years when you want to be on the beach.
The responsibilities of a business owner are often overwhelming, but by outsourcing smaller tasks, reviewing your providers, and prioritizing activities that fuel business growth, you can help your business thrive even when the working day is frantic.
Contributed by Matt Baisden (CFA, QKA), a retirement plan advisor at Plancorp, a full-service wealth management company serving companies and families in 44 US states and managing more than US$5.5 billion of client assets. Matt’s team specializes in 401(k)s for businesses, managing US Department of Labor test issues, resolving service provider failures, benchmarking fees, and designing profit-sharing to maximize key employee benefits for clients.